World Economy

Call for Pro-Growth Policies

Call for Pro-Growth Policies Call for Pro-Growth Policies

The leaders of the International Monetary Fund and the World Bank pledged Thursday to redouble efforts to bolster shaky global growth prospects and combat increasing political attacks on free trade and other hallmarks of globalization.

At the outset of the spring meetings attended by central bankers and finance ministers from 189 countries, IMF Managing Director Christine Lagarde and World Bank President Jim Yong Kim said stronger policies are needed to combat a growing array of risks to the world economy, AP reported.

The two officials sought to address the political backlash against globalization, which has helped propel the presidential campaign of Republican front-runner Donald Trump in the United States and has triggered an upcoming vote in Britain in June over whether that country should exit from the European Union.

The two leaders spoke at the start of three days of meetings among top finance officials, beginning with discussions Thursday and Friday among the Group of 20 major economies, which include traditional economic powers like the United States and Germany and emerging economies such as China and India.

Both Lagarde and Kim said the answer to stagnant wages in many industrial nations and complaints about jobs being lost to trade competition was to pursue policies that will ensure stronger growth.

Kim said lowering trade barriers has helped lift millions of people around the world out of poverty. Trump, in his presidential campaign, has charged that reducing trade barriers has cost American jobs and he has vowed to impose penalty tariffs if countries such as China and Mexico do not stop their unfair trade practices.

“This movement toward isolationism and the movement away from trade is very bad for poor people,” Kim told reporters. “It is very bad for our efforts to reduce poverty.”

  Growth Too Slow

At a separate news conference, Lagarde insisted things have improved since the financial crisis, although she said growth has been too slow and uneven.

“The recovery remains too slow and too fragile,” she said, noting that the IMF in its new economic forecast has once again reduced its estimate for global growth to 3.2% for 2016, down from a 3.4% forecast made just three months ago.

She said growth at this rate was not enough to lift living standards or create sufficient job opportunities for the nearly 200 million around the world who are officially unemployed and looking for jobs.

And she said anemic growth puts added strains on middle-class families and the poor and “emboldens the voices of protectionism and fragmentation.”

Kim, asked about the leaked documents from a Panama law firm that have revealed details of offshore financial accounts, said such tax havens can have a devastating effect on global poverty.

“I want to stress that when taxes are evaded, when state assets are taken and put into these havens, all these things can have a tremendously negative effect on our mission to end poverty,” Kim said.

The finance ministers of five leading European nations—Britain, Germany, France, Italy and Spain—called on the international community to do more to fight tax fraud and money laundering by sharing ownership and tax data, helping establish the true beneficiaries behind companies and other entities and prevent the use of tax havens.

  Target Brexit

“We have clearly elevated (so-called) Brexit as more of a serious downside risk to our forecast for global growth, Lagarde said.

The United Kingdom has scheduled a referendum for June 23 to determine whether it should leave the 28-nation bloc, a proposal fueled at least in part by the massive flow of refugees from Syria into Europe and terrorist attacks in Paris and Brussels.

Besides curtailing trade between the UK and the rest of Europe, commerce among other countries is also at risk, she said.